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Do purchase orders count as a contract?

GeorgiaConstruction ContractMechanics LienRight to Lien

We do work in Georgia and in Texas. I see that your article "Can I File a Lien without a Written Contract?" shows it is imperative to use contracts to protect lien rights. If we are not using contracts but instead have POs, would that be sufficient?

1 reply

Jun 7, 2019
That's a good question, and it's worth first mentioning that the article serves as a guideline - and there aren't always cut and dry rules for all mechanics lien requirements in every state. First, let's clarify the rule for written contracts and liens in Texas. Then, we can look at whether an executed purchase order might, for all intents and purposes, form a contract.

Texas Liens and Written Contracts
In Texas, written contracts aren't always required in order to maintain the right to lien. Rather, they're only required for residential homestead projects. So, for contracts that do not constitute a residential homestead, no written contract is needed in order to later have the ability to file a Texas mechanics lien. For more information on Texas Homestead liens (and contract requirements for them), this resource will be helpful: Texas Mechanics Lien on Homestead Property: Everything You Need to Know.

Purchase Orders in Lieu of Contracts
Regarding the use of purchase orders instead of contracts, as a lawyer, I can't help but mention that using written contracts is always the best practice. But, having a separate written and signed agreement might not always be necessary.

In order to create a "contract", there must generally be a few things present. Typically, in order for a "contract" to be formed, there must be offer, acceptance, and consideration (i.e. each side must be set to get something in return). So, if a written purchase order clearly indicates an offer (like offering to provide specific services or materials, amounts, etc.), acceptance (the purchase order is clearly accepted by some action - like a signature), and if consideration is set to be exchanged (typically payment), then a contract might be formed - regardless of whether the document itself purports to be a "contract". Though, it's worth noting that there also should generally be some evidence that both parties understood they were entering an agreement.

All of that is to say that purchase orders, for all intents and purposes, may ultimately create a contractual relationship between parties. And, if that's the case, a written purchase order that has created a contract may be, essentially, a written contract itself.

For more information on purchase orders, this article will be valuable: Understanding the Construction Purchase Order | Construction Documents.

For more on Texas and Georgia's lien laws, these resources should help:
(1) Texas Mechanics Lien and Notice Overview, FAQs, and Statutes;
(2) Georgia Mechanics Lien and Notice Overview, FAQs, and Statutes.
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